updated 09:40 am EDT, Tue March 15, 2011

NPD gives Netflix 61pc of online movies

Netflix now has a dominant share of the online video on demand business, according to new NPD data. The subscription streaming service has 61 percent of all the movies downloaded or streamed in January and February. Apple, despite iTunes' reputation, was at just four percent and tied with both DirecTV and Time Warner Cable.

Comcast's Xfinity service was actually higher at eight percent in spite of being limited to those on one cable provider.

Analysts at NPD believed the gap came from not just prices but the experience. Apple's store has a much wider selection of up to date titles, but Netflix's service costs as little as $8 per month, making it a much better value for those who don't mind the selection. It also had a better "overall shopping experience," respondents said. Although not mentioned, Netflix's ubiquity and queuing might have helped, since it can be found on many TVs and Blu-ray players as well as all major game consoles, the iPad, and the iPhone.

The share would help explain Apple's decision to include Netflix on the current Apple TV, since it gives users access to a more popular video service.

Research also suggested that, despite cable and satellite provider protests to the contrary, Internet video was also making incursions into the home. About a quarter of all home video, regardless of format, was now coming from an online source, NPD said. Telecom giants like Time Warner have tried to downplay Netflix but have watched as it has reduced the incentive to use cable video on demand services or to subscribe to premium channel bundles.

However...

I like the Apple Rental Service, since it provides a local copy of the movie on my iPhone. You can't use Netflix on a plane, even if they have WIFI; they don't allow streaming services. The premium is worth the opportunity to watch a movie on a plane.

Catalog

While Apple may have more current titles, Netflix has a significantly larger catalog. Combine that with the all-you-can-eat (and the ability to get DVD/Blurays for everything else) and it's a definite advantage. The problem is that the ISPs (who, btw, also compete with Netflix) are beginning to cap data usage. Once this happens across the board, all-you-can-eat isn't gonna make any difference because you'll hit the data cap and have to pay overage charges. Then the subscription model will become less appealing since you'll still have to be selective about what you watch to either stay under the cap or pay for overage. Trying to figure out how much in overage charges a particular video will cost will be extremely confusing to figure out vs paying $4 for a movie or $2 for a tv show.

This data usage cap is going to turn the fledgling video streaming market on it's head and will most likely kill the current movement towards the a la carte model that a lot of consumers are just now starting to experience. At least until someone steps in to stop it (yes, I'm proposing government regulation). Net neutrality is important folks.